Centennial Cellular Corp. Reports Record Fiscal 1999 Year Results.NEPTUNE Neptune, in Roman religion and mythology Neptune, in Roman religion and mythology, god of water. He was presumably an indigenous god of fertility, but in later times he was identified with the Greek Poseidon, god of the sea. , N.J.--(BUSINESS WIRE)-- July July: see month. 13, 1999 (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CYCL CYCL - A frame language. ["Building Large Knowledge-Based Systems", Doug B. Lenat et al, A-W 1990]. ) Centennial Cellular Corp. announced today record results for revenue, recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become and subscriber additions for the year ended May 31, 1999 for both domestic cellular and Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. integrated communications services. Total Company revenues increased 57 percent to $369.2 million, from $235.8 million for the prior fiscal year. Earnings before interest, taxes, depreciation, amortization and recapitalization Recapitalization Restructuring a company's debt and equity mixture often with the aim of making a company's capital structure more stable. Notes: Companies often want to diversify their debt-to-equity ratio to improve liquidity. costs (recurring EBITDA) were $183.5 million, an 85 percent increase from the prior year. Fiscal year recurring EBITDA for Centennial's domestic operations increased 47 percent to $127.4 million from $86.7 million in the same period last year. Fiscal year recurring EBITDA for Centennial's Puerto Rico operations increased more than four-fold to $56.1 million from the same period last year. "Both of Centennial's businesses showed tremendous gains for the quarter and the fiscal year," said Michael J. Small, president and chief executive officer. "We now have digital technology deployed in 89 percent of our domestic markets and 100 percent of the Puerto Rico market. We are positioned well for continued rapid growth." The deployment of digital technology and the launch of digital rate plans contributed to the addition of a record 67,900 new customers in the domestic operation. Total revenue per customer remained at a domestic cellular industry leading level of $69 per month as a result of strong roaming The ability to use a communications device such as a cellphone or PDA and be able to move from one cell or access point to another without losing the connection. traffic and increased usage. Network enhancements also supported the rapid growth of Centennial de Puerto Rico, a fully integrated communications provider of wireless, wireline and Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the services. The installation of a second switch and the fourth CDMA (Code Division Multiple Access) A method for transmitting simultaneous signals over a shared portion of the spectrum. The foremost application of CDMA is the digital cellular phone technology from QUALCOMM that operates in the 800 MHz band and 1.9 GHz PCS band. carrier, as well as 60 new fiber route miles The number of miles that are spanned by a telecommunications network. It does not include combined wire mileage due to multiple wires or fibers within a single cable or by overlapping segments, just the total geographic distance between cities or other terminal points. , fueled the addition of 64,000 wireless customers and a six-fold increase in wireline revenue during fiscal 1999. Wireless usage per customer increased to 436 minutes per month, a level that indicates significant substitution Substitution Arsinoë put her own son in place of Orestes; her son was killed and Orestes was saved. [Gk. Myth.: Zimmerman, 32] Barabbas robber freed in Christ’s stead. [N.T.: Matthew 27:15–18; Swed. Lit. of wireless for wireline usage. Centennial de Puerto Rico also became the first wireless recipient of Federal Universal Service funds, which traditionally went to wireline carriers. For the Puerto Rico operations, fiscal 1999 total revenue per subscriber was $89, compared to $90 in fiscal 1998. The consolidated net loss for the year ended May 31, 1999 was $80.2 million after recapitalization costs of $52.8 million and extraordinary loss of $35.1 million, net of tax, compared to a net loss of $31.9 million for the year ended May 31, 1998. After dividends payable Dividends payable The declared dividend dollar amount that a company is obligated to pay. on preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. , the Company's basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. net loss per common share was $1.96 and $0.84 for the years ended May 31, 1999 and 1998, respectively. Revenue from Centennial's domestic wireless business was $241.9 million for the year ended May 31, 1999, an increase of $60.4 million or 33 percent over revenue of $181.5 million for the year ended May 31, 1998. Recurring EBITDA for the year ended May 31, 1999 in Centennial's domestic wireless business was $127.4 million, an increase of $40.7 million or 47 percent above the year ended May 31, 1998. Revenue from the Company's Puerto Rico wireless and wireline businesses for the year ended May 31, 1999 was $127.2 million, an increase of $72.9 million above the $54.3 million for the year ended May 31, 1998. Recurring EBITDA in the Puerto Rico operations for the year ended May 31, 1999 was $56.1 million, an increase of $43.6 million above the $12.5 million for the year ended May 31, 1998. The Company's wireless subscribers at May 31, 1999 were 454,100 as compared to 322,200 at May 31, 1998, an increase of 131,900 subscribers or 41 percent. Domestic wireless subscribers increased by 67,900 to 320,600 subscribers at May 31, 1999, due to internal growth. Subscribers of the Company's Puerto Rico wireless system totaled 133,500 and 69,500 at May 31, 1999 and 1998, respectively. The Company's Puerto Rico wireless subscriber growth accounted for 49 percent of the Company's total subscriber increase. On January 7, 1999, CCW (Continuous Composite Write) A magneto-optic disk technology that emulates a WORM (Write Once Read Many) disk. It uses firmware in the drive to ensure that data cannot be erased and rewritten. Acquisition Corp., a Delaware corporation A Delaware corporation is a corporation chartered in the U.S. state of Delaware. Delaware is well known as a corporate haven, and thus, over 50% of US publicly-traded corporations and 58% of the Fortune 500 companies are incorporated in the state. organized at the direction of Welsh, Carson, Anderson Anderson, river, Canada Anderson, river, c.465 mi (750 km) long, rising in several lakes in N central Northwest Territories, Canada. It meanders north and west before receiving the Carnwath River and flowing north to Liverpool Bay, an arm of the Arctic & Stowe VIII, LP, merged with and into Centennial (the "Merger"). Centennial continued as the surviving corporation in the Merger. Centennial is one of the largest independent wireless telecommunications service providers A Telecommunications Service Provider or TSP is a type of Communications Service Provider that has traditionally provided telephone and similar services. This category includes ILECs, CLECs, and mobile wireless companies. in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Puerto Rico with approximately 10.8 million Net Pops. Centennial's domestic cellular operation has 5.8 million Net Pops. Centennial de Puerto Rico is a fully integrated provider of communications services in Puerto Rico, utilizing a PCS (1) (Personal Communications Services) Refers to wireless services that emerged after the U.S. government auctioned commercial licenses in 1994 and 1995. This radio spectrum in the 1. license that covers 3.8 million Pops in Puerto Rico and the U.S. Virgin Islands, and a CLEC (Competitive Local Exchange Carrier) An organization offering local telephone service that is not one of the traditional telephone companies. The Telecommunications Act of 1996 allowed competition to the incumbent telcos (ILECs), enabling new companies (CLECs) license to operate throughout Puerto Rico. In addition, the Company owns minority shares representing approximately 1.2 million Net Pops in certain other cellular operations controlled and managed by other cellular operators. Welsh, Carson, Anderson & Stowe (WCAS WCAS Weinberg College of Arts and Sciences WCAS Warfighter Communication Assessment System (US DoD) ) and an affiliate of the Blackstone Group Blackstone Group L.P. (NYSE: BX) is a prominent private equity and investment management firm founded in 1985 by Peter G. Peterson and Stephen A. Schwarzman. The company is based in New York City, in River House on Park Avenue at Fifty-first Street, with offices in Atlanta, are controlling shareholders of Centennial. WCAS is a private investment firm based in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of and founded in 1979. WCAS currently manages over $8 billion in private equity capital and focuses primarily on the information services See Information Systems. and healthcare industries. The Blackstone Group is a New York based private investment bank whose current corporate investment vehicle, Blackstone Capital Partners III Merchant Banking Fund, LP, has approximately $3.8 billion in committed capital. -0-
CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in thousands)
Three Months Ended Twelve Months Ended
May 31, May 31,
1999 1998 1999 1998
REVENUE:
Service revenue - Domestic $65,164 $46,737 $236,951 $177,999
Service revenue - Puerto Rico 38,528 18,245 123,950 53,098
Equipment sales - Domestic 1,758 812 4,951 3,503
Equipment sales - Puerto Rico 1,110 317 3,299 1,216
------- ------ -------- --------
106,560 66,111 369,151 235,816
COSTS AND EXPENSES:
Cost of equipment sold
- Domestic 4,696 3,122 18,354 15,623
Cost of equipment sold
- Puerto Rico 2,933 700 4,711 1,229
Cost of services - Domestic 7,690 5,419 26,651 24,226
Cost of services
- Puerto Rico 6,795 3,329 23,181 13,740
Sales and marketing
- Domestic 7,257 4,878 29,560 22,561
Sales and marketing
- Puerto Rico 5,977 2,828 21,978 13,313
General and administrative
- Domestic 11,368 7,709 39,906 32,422
General and administrative
- Puerto Rico 6,694 4,233 21,312 13,494
Depreciation and
amortization - Domestic (1) 4,897 20,631 67,282 81,402
Depreciation and amortization
- Puerto Rico 12,097 10,926 47,414 32,792
Recapitalization costs (2) (6,021) - 52,831 -
------- ------ ------- ------
64,383 63,775 353,180 250,802
OPERATING INCOME (LOSS) 42,177 2,336 15,971 (14,986)
INCOME FROM EQUITY INVESTMENTS 2,150 3,226 11,502 13,069
(LOSS) GAIN ON DISPOSITION OF
ASSETS (383) (3) 8,031 5
INTEREST EXPENSE - NET 39,140 11,669 87,693 43,470
INCOME (LOSS) BEFORE INCOME TAX BENEFIT,
MINORITY INTEREST AND
EXTRAORDINARY ITEM 4,804 (6,110) (52,189) (45,382)
INCOME TAX LIABILITY (BENEFIT) 3,294 (70) (6,820) (13,597)
INCOME (LOSS) BEFORE MINORITY INTEREST AND
AND EXTRAORDINARY ITEM 1,510 (6,040) (45,369) (31,785)
MINORITY INTEREST IN LOSS (INCOME)
OF SUBSIDIARIES 139 175 281 (162)
INCOME (LOSS) BEFORE EXTRAORDINARY
ITEM 1,649 (5,865) (45,088) (31,947)
EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT
OF DEBT, NET OF INCOME
TAXES OF (16,698)(2) 5,447 - (35,079) -
NET INCOME (LOSS) $7,096 $(5,865) $(80,167)$(31,947)
=========== ======== =========== =======
(1) Effective March 1, 1999, Centennial prospectively changed its
amortization period for cellular telephone licenses from ten
years to forty years to better reflect the period over which the
economic benefits of the cellular licenses are expected to be
realized. The Company also prospectively changed its amortization
period for the difference between the cost of its equity
investments and the underlying book value from ten years to forty
years to better reflect the period over which the economic
benefits of the equity investments are expected to be realized.
(2) In the fourth quarter of fiscal 1999, the Company reduced
recapitalization costs as a result of actual costs incurred being
less than those previously estimated. Also during the fourth
quarter, the Company reduced the extraordinary loss on early
extinguishment of debt due to a change in the effective tax rate
of the Company.
CENTENNIAL CELLULAR CORP.
STATISTICS
May 31, 1999
($000's, except per subscriber data)
For the Quarter Ended For the Year Ended
5/31/99 5/31/98 5/31/99 5/31/98
DOMESTIC
Subscribers 320,600 252,700 320,600 252,700
Net Gain
- Subscribers 11,300 14,800 67,900 65,700
Revenue per Average
Customer $70 $63 $69 $69
Penetration 5.5% 4.7% 5.5% 4.7%
Churn 2.2% 1.7% 2.0% 1.8%
MOU's per Customer 104 104 105 101
Cost to Acquire
per Activation $310 $254 $302 $294
Capital Expenditures $12,778 $7,633 $37,908 $38,996
PUERTO RICO
Wireless Revenue $33,428 $16,992 $109,523 $51,483
Wireline Revenue $6,210 $1,570 $17,726 2,831
Wireless Subscribers 133,500 69,500 133,500 69,500
Net Gain - Wireless
Subscribers 16,100 8,900 64,000 52,600
Revenue per Average
Wireless Customer $87 $84 $89 $90
Penetration 3.3% 1.9% 3.3% 1.9%
Churn 3.2% 5.7% 3.5% 5.0%
MOU's per Wireless
Customer 446 390 436 358
Capital Expenditures $20,807 $18,480 $65,496 $90,304
Fiber Route Miles 328 268 328 268
REVENUES
Consolidated $106,560 $66,111 $369,151 $235,816
Domestic $66,922 $47,549 $241,902 $181,502
Puerto Rico $39,638 $18,562 $127,249 $54,314
RECURRING EBITDA
Consolidated $53,150 $33,893 $183,498 $99,208
Domestic $35,911 $26,421 $127,431 $86,670
Puerto Rico $17,239 $7,472 $56,067 $12,538
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